What We Think: Withdrawal of tax swap plan is good for state

In scrapping his controversial and embattled tax swap plan Monday, Gov. Bobby Jindal did the right thing for the citizens of Louisiana.

The tax swap, which sought to remedy the problem of the state's complicated tax code, which is riddled with loopholes, would have eliminated the state income tax in exchange for a higher sales tax with a broader reach. The new plan would have taxed services that have never been taxed.

Many believe the higher sales tax would have hurt businesses and low-income families. Moreover, although the plan was touted as being "revenue neutral," a recent report from the Public Affairs Research Council, a non-partisan organization, showed that the swap would put the state $650,000 in the red.

In his remarks during the opening of the legislative session Monday, according to an online report from Gannett Louisiana's Capital bureau reporter Mike Hasten, Jindal told lawmakers that people have been saying to him, "Governor, you're moving too fast and we're not sure that your plan is the best way (to reform the tax code)."

That has been the opinion of this newspaper's editorial board all along.

Opposition was coming from all quarters, it seemed.

Democrats and Republicans alike have questioned the merits of the plan and opposition was forming among legislators.

Earlier this year, 250 members of Louisiana's clergy came out against the tax swap because they said it would hurt the poor. Even with the rebate the Jindal administration promised for low-income families, the plan would have caused hardships because the tax would have been paid up front and could have led to shortfalls between paychecks.

Louisiana Association of Busininess and Industry did not give the plan its seal approval. Many experts have said the high sales tax would keep Louisiana businesses, including the oil industry, from being competitive with companies in other states. In addition, taxing services - such as hair cuts and lawn care - could have a chilling effect on small businesses and corporations alike.

In his speech, Jindal indicated that tax reform is still very much alive, but would, of course, take a different form.

Just four months ago, in mid-December, Tim Barfield, executive counsel for the Louisiana Department of Revenue, and Stephen Moret, secretary of the Louisiana Department of Economic Development, met with The Daily Advertiser's Editorial Board to discuss a revenue-neutral tax plan that would simplify the state income tax code by closing loopholes and duplications in the tax code.

But about a month later, it appears that plan was set aside when the tax swap was unveiled.

On Monday, Jindal called upon the Legislature to help develop an alternate plan to eliminate state income taxes. In addition to any new ideas, it makes sense to also consider reviving that original tax reform plan .

Would that be a better idea - to revert to the original plan, instead of eliminating the income tax altogether?

Whatever the approach will be, we hope Jindal will take the time to fully explore the possible consequences of the substitute reform plan, as well as other plans or programs that he wishes to propose in the future.

We applaud Jindal's willingness to be flexible.

In his remarks, Jindal said to the citizens of the state, "OK. I hear you."

Governor, that is a pivotal step in the right direction. We urge you to keep listening.

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What We Think: Withdrawal of tax swap plan is good for state

In scrapping his controversial and embattled tax swap plan Monday, Gov. Bobby Jindal did the right thing for the citizens of Louisiana.